Argentine Bonds Plunge

As Argentina's government proposes swapping securities subject to U.S. law with local debt, selloff of the nation's bonds extended.

Argentine bonds fell, deepening a selloff since the country lost a bid to reverse a U.S. court ruling that it must pay holders of defaulted notes in full, as investors doubted the nation can skirt the order and avoid default with a plan to shift overseas debt to the local market.

The proposal last night by Economy Minister Axel Kicillof to swap securities subject to New York laws into local debt is technically difficult and of limited appeal for many holders of the restructured notes, analysts at Credit Suisse Group AG, Citigroup Inc., and Jefferies Group LLC said in reports.

An interest payment of $907 million on restructured notes is due on June 30. To avoid suspending payments, Argentina will ask bondholders to swap debt sold under New York law into securities governed by Argentine legislation and therefore not subject to U.S. court orders.

If the government doesn’t make the interest payment on the restructured notes this month, the bonds will be in default after a 30-day grace period.

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